The Equitable Life Payment Scheme closed to new claims at the end of the year, with all correspondence due to cease on 29 February, except for complaints relating to payments received after 29 January.
These policyholders will have one month from the date of their payment letter to lodge a complaint.
As announced by the chancellor in the Summer Budget 2015, the compensation scheme closed on 31 December, with all claims begun by that date still being processed, and the annual payments to with profits annuitants continuing unaffected.
The scheme, which began making payments in 2011, has paid out over £1.08bn to nearly 90 per cent of eligible policyholders.
The November progress report stated that 460,684 payments, totalling £176.2m, have been issued to those who bought their policy through a company pension scheme.
The scheme has made major efforts have to trace policyholders, including extensive electronic tracing methods, writing to policyholders’ last known addresses, a national advertising campaign, working with other government departments and liaising with group scheme trustees.
As part of the closure, additional payments would be made to policyholders in receipt of Pension Credit who received a lump sum payment under the scheme. The amount of the additional payment will be equivalent to the 22.4 per cent of relative loss payment already received.
An extra payment is being made in early 2016 to non-WPA policyholders who have already received 22.4 per cent of their relative losses from the scheme and are in receipt of Pension Credit.
The additional 22.4 per cent of an individual’s relative loss means that eligible policyholders on Pension Credit will receive a total of 44.8 per cent of their relative losses from the scheme.
The additional payments will be issued by the scheme in the same way as the first payment, by the scheme sending a warrant (like a cheque) in the post in early 2016.
Difficulties at the world’s oldest mutual started in January 1994, when the society announced plans to cut the size of the final bonuses paid to its 90,000 guaranteed annuity rate policyholders, after falls in interest rates and high inflation.
Equitable Life, which was established in 1762, closed its doors to new business after it failed to find a buyer in December 2000 and the Court of Appeal told the society it must honour its original commitments.
Several official reports have been produced on the society’s demise, but it was parliamentary ombudsman Ann Abraham who recommended that policyholders be compensated.
peter.walker@ft.com
